NPS Scheme Benefits: National Pension System (NPS) is one of the most favourable investment instruments among investors due to its various benefits. It provides tax benefits, low-cost structure, & even good returns.
NPS Scheme Eligibility:
Any individual from 18 - 65 years of age can join NPS & remain invested in it until 70 years of age.
Recently, during the COVID-19 pandemic, the government has extended the deadline to make voluntary contributions to Tier 1 Accounts of the NPS, from March-end 2020 to June 30, 2020. The extension will help NPS subscribers who wish to avail of the tax benefit for FY 2019-20. He/she will be able to do so by investing in NPS till 30 June 2020.
Investing in NPS is very much popular among investors, not just due to its tax benefits. But, Amit Sinha, Executive Vice President, NSDL e-Governance, explains, “Interest rate on PPF, for example, is fixed & it is getting gradually reduced by the government. In NPS, though returns are not guaranteed, exposure to equity can give you better returns in the long run.”
What are the benefits of the National Pension System?
1. Voluntary
NPS is a voluntary investment option. Here, investors can contribute at any point of time & also change the amount he/she wants to set aside and save every year for it.
2. Opening Account is Simple
For opening & managing an NPS account is quite simple. A subscriber can open his or her account by oneself by either online through eNPS (eNPS – National Pension System) or by approaching any one of the POPs (Points of Presence). Subsequent operations of NPS accounts such as changes in subscriber details, contribution, etc can also be done online using the login credentials of the subscriber.
3. Tax benefits
NPS subscribers enjoy tax benefits of Rs 1.5 lakh including their own contributions & their employer’s contribution, as applicable. These tax benefits can be claimed under Section 80CCD(1), and 80CCD(2) of the Income Tax Act. Besides, a taxpayer can claim additional tax deduction under section 80CCD (1b) for a maximum of Rs 50,000 in a financial year. The additional tax benefit is over and above tax-break, under section 80CCD (1) and 80CCD (2).
4. Highly Flexible
Subscriber can choose and change his/her own investment options (Active or Auto choice) and pension fund who manages his/her investments.
5. Smooth Portability
It is one of the main attributes of NPS. It provides smooth portability of a PRAN account across jobs and locations.
6. Less Cost Structure
This scheme is considered as one of the low-cost pension schemes. As per experts, the administrative charges and fund management fees are also the lowest.
7. PFRDA
NPS is regulated by PFRDA. Thus, it has transparent investment norms, regular monitoring & performance review of fund managers by NPS Trust.
How can you open an NPS account?
The interested applicants can go to the eNPS website of NSDL CRA and open an account through PAN and bank verification. After giving important details & payment of initial contribution, PRAN will get generated instantly.
Click Here for NPS Online Registration
